Protectionism

Historical Background

The history of protectionism is rooted in the mercantilist era of the 16th-18th centuries. Leaders in that period, principally for two national security reasons, embraced policies we would today call protectionist. One reason was the perceived need for national self-sufficiency, often referred to as “autarky.” That meant a capacity either to be independent of foreign sources of essential goods or to [Page 1401]control them outright. The other security concern was to avoid a trade deficit, especially important in the mercantilist era because the principal trading actor was the state or its chartered agents.

Accordingly, a trade deficit in those years meant literally that in exchange for its exports a nation had earned too little gold or silver (“specie”), and specie was the essential and vital link to national security. Its importance stemmed from the fact that in the age before military conscription, a monarch had to pay hard cash for his soldiers and sailors. His troops, native born or not, were what today we would call mercenaries. Without them, the state's existence could not be ensured. For that reason, trade, and especially the need to ensure more exports than imports, was indeed both a central political and economic issue. The goal of a trade surplus was used to justify policies that would today be called protectionist.

The more modern use of the word protectionism stems principally from its economic roots, and a classic example is Alexander Hamilton's famous 1791 defense of “infant industries.” Hamilton used that phrase in his “Report on Manufactures,” where his goal was to ensure that the newly established United States would be grounded not only on an agricultural economic base but on manufactures as well. Hamilton's argument was that the new industries in the United States would need to be “protected” against the inevitably cheaper goods emanating from the more advanced economies of the time, mainly British.

Following Hamilton's time, among the principally Western nations that accounted for the bulk of international trade, policies we would today call protectionist were widely followed, and without apology. The reasons combined both of the goals just mentioned: to achieve as much resource self-reliance as possible, and to promote the rise of home-grown industries. Often the “industry” to be protected was agricultural, and the justification frequently was to achieve food “self-sufficiency.”

A well-known contemporary illustration is Japan's policy against significant rice imports, but Japan is hardly unique in this regard. Most agricultural-commodity producing nations also limit or even prohibit imports of farm products, including the United States, India, France, Korea, Switzerland, and others. What makes Japan special is that it justifies its rice policy by citing the need to maintain wartime “food security,” a rationale that makes little sense in the thermonuclear era.

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